HOPES that Britain will avoid a triple-dip recession were boosted today as figures showed output from the manufacturing sector rose at its fastest pace since September 2011.

HOPES that Britain will avoid a triple-dip recession were boosted today as figures showed output from the manufacturing sector rose at its fastest pace since September 2011.

The Markit/CIPS purchasing managers’ index (PMI) for January showed overall activity expanded thanks to the rise in output, with a headline reading of 50.8 – above the 50 level that separates growth from contraction for the second month in a row.

While this was down on the 51.2 reading in December, it came despite last month’s snow and adverse weather, which many had feared would impact on manufacturers badly.

The sector was a significant drag on the wider economy at the end of last year, contributing to the worse-than-expected 0.3% decline in gross domestic product (GDP) in the fourth quarter of 2012.

Last week’s GDP blow has raised fears that the UK is heading for an unprecedented triple-dip recession .

The economy would have to contract again this quarter to be back in recession, and there has been little optimism following the snow-hit start to 2013.

But the latest manufacturing report suggests the worst is over for the sector, which accounts for more than 10% of the economy.

James Knightley, economist at ING Bank, said the report "offers hope that the GDP contraction in the fourth quarter will not be repeated in the first quarter of 2013".

John Union, head of corporate banking for Barclays Wales welcomed the positive figures.

"It’s been a good start to the year for UK manufacturing with production and new orders holding well," he said. "The weakening of sterling against the euro should, on balance, benefit UK exports but it is clear the general outlook remains far from certain, both at home and in key export markets."

Howard Archer, chief UK and European economist at IHS Global Insight suggested the manufacturing sector may have turned the corner.

"The overall impression is that the manufacturing sector may be past the worst after a pretty torrid 2012, but it still has its work cut out to return to sustainable decent growth in the face of ongoing challenging domestic and international conditions," he said.

"Domestic demand for manufactured goods is handicapped by current muted investment intentions and tightening public spending.

"Furthermore, consumers’ purchasing power is coming under renewed pressure from a move back up in inflation and muted earnings growth."

The figures also showed employment edging higher in the manufacturing sector for the second consecutive month, which follows job losses throughout much of 2012.

Firms reported a marginal increase in new orders over January, which allowed many to clear backlogs of work, but there was a further drop in export orders, which have now fallen consistently for over a year.

Lee Hopley, chief economist at manufacturers’ organisation EEF, said the recent fall in the value of the pound would help improve exports and support the sector’s recovery.

"There are reasons to believe this expansionary trend could be maintained in the coming months with European indicators at least stabilising, emerging market activity improving, and a weaker sterling helping some sectors in overseas markets," she added.

GDP figures for the final three months of 2012 estimated that activity in the wider production sector fell 1.8% quarter on quarter, although most of this was due to disruption at the Buzzard oil field in the North Sea, which was shut during extended maintenance and has now restarted production.

The powerhouse services sector, which accounts for 77% of the economy, saw output grind to a halt in the fourth quarter due to the absence of the Olympics boost.

The only bright spot was the construction sector, which delivered a 0.3% rise in activity, but this was also lower than hoped.

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